What will an independent Scotland mean for the gambling industry?18th September 2014 7:09 am GMT
Betfair may have decided to pay out early on a no vote, but if Scotland decides to vote in favour of independence, what can the gambling industry expect from the SNP?Today’s vote could prove to be a cataclysmic event for the United Kingdom as a whole, with the outcome of the Scottish Referendum still seen as too close to call by almost all pollsters. Despite the Better Together campaign’s marginal lead – around four points according to an ICM Research poll – the SNP-led independence campaign remains within touching distance of success.Each side has come out with dire proclamations of what may happen should the electorate vote for or against independence, but gaming operators are yet to openly discuss the ramifications of independence for their businesses in Scotland, which accounts for around 11 per cent of the total UK retail betting estate. This shouldn’t be viewed as an oversight on their part. Not only are companies currently preparing for the implementation of the Gambling (Licensing and Advertising) Act in England, but odds have generally skewed in favour of a no vote. According to Oddschecker, the average price on a no vote bet stands at 1/4 – suggesting 75 per cent in favour – and 11/5 for yes, or 27.5 per cent probability. There seems to be consensus that it will not happen. Ladbrokes has even estimated that up to £50m will be wagered on the referendum’s outcome – it has been called “the coming of age of political betting” by William Hill – so the bookmakers may simply enjoy the revenue boosting event. Yet these companies may find themselves in a very different position should Scotland decide to vote for independence. In the event of a yes vote, responsibility for the regulation of gambling will transfer to the Scottish National Party (SNP)-led Scottish Parliament. While the SNP is yet to publicly announce a policy for the regulation of gambling, it is expected to push for stricter controls on the industry. While the party told Gaming Intelligence that it was unable to provide details of its plans for the sector by polling day due to a huge number of requests, it is possible to make some predictions on its plans for Scotland’s gambling industry going by its past rhetoric. But just how popular is gambling in Scotland? The most up-to-date information we have is the 2012 Scottish Health survey, published in September last year (2013’s survey will be published on September 30th). The survey was the first of its kind to carry a chapter on gambling, and showed that seven in ten Scottish adults had gambled in the past twelve months, with men more likely to do so than women (74 per cent to 67 per cent). It found that 58 per cent of all adult gamblers played the national lottery, with 12 per cent of men, and 4 per cent of woman betting or playing casino games online. In 2012 it found that 0.7 per cent of Scottish players could be classed as problem gamblers, based on an average of 1.7 per cent of men and 0.1 per cent of female players. It also noted that those living in the most deprived areas of the country were around 6.9 times more likely to be a problem gambler.Machines in dangerSuch figures fuel worries about certain forms of gambling, namely fixed-odds betting terminals (FOBTs), which have become a political football across the UK, with politicians and the media regularly spitting out the “crack cocaine of gambling slogan” and accusing bookmakers on feeding off desperation in deprived areas.These are largely inaccurate. Inspired Gaming Group CEO Luke Alvarez says average spend per session is between £4 and £7, with an average play time of between ten and fifteen minutes, based on cash spent in a session rather than value played through. But despite this the SNP’s Member of the Scottish Parliament (MSP) for the West of Scotland Stuart McMillan is leading a campaign for immediate action against FOBTs. In a letter to the UK government in April this year, he called on Westminster to seriously consider how FOBTs are regulated. “Until Scotland becomes independent the powers of regulating gambling ultimately rest with Westminster – so it is up to Westminster to act now to protect people and families whose lives are being ruined by these machines,” McMillan said. With the power to regulate the machines in his party’s hands, it is likely that he will look to put his support for the Campaign for Fairer Gambling into practice. Like the lobby group, he supports the decision to reduce the maximum stake from £100 to £2. Scotland accounts for approximately 11 per cent of the UK's betting shops, and despite a population of just 5 million, McMillan claims that players spent around £4.4bn playing FOBTs in 2013. The industry also employs around 5,000 people north of the border and according to the Association of British Bookmakers, contributes £352m to the local economy annually and £110m in taxes. It remains to be seen whether McMillan will enjoy widespread support from his colleagues, but he has already organised an initiative in the council area of Inverclyde where former gambling addicts speak to schoolchildren about the dangers of excessive play. He is also a member of the Referendum and Local Government & Regeneration Committees, giving him the perfect platform from which to launch strict legislation similar to that promised by Labour Party leader Ed Miliband. It is not inconceivable that as a centre-left party like Labour – arguably more so – the SNP may pursue controls that give councils the power to refuse planning permission for new betting shops. Ultimately, it seems likely that the industry will have a lot of lobbying work to do if it is to avoid a major crackdown on betting machines and its wider retail estate. Indeed, action is already being taken, with Glasgow City Council launching an investigation into ways to limit the number of machines and amounts spent. It is refusing to commit to a ban on the machines, but is calling for a new approach to regulation.The online issueWhile the SNP’s position on betting shops appears clear, its attitude towards online gambling is less well defined. Only two high-profile individuals within the party have spoken out against online gambling, Member of Parliament for Westminster Mike Weir, who represents the constituency of Angus, and McMillan. Weir has described online gambling as “very dangerous” and called for licensing laws similar to those enforced on the sale of alcohol, but he was unable to hold a parliamentary debate on the issue at his last attempt back in 2006. However, McMillan has already been outspoken in his criticism of the 2005 Gambling Act, which he described as having “significantly liberalised” regulations, and while he welcomed this year's passage of the Gambling (Licensing and Advertising) Act, he also criticised it as a “very limited” step in the right direction. “Until Scotland becomes independent the powers of regulating gambling ultimately rest with Westminster,” he said, calling on the UK government to take action to tighten online and land-based legislation. What would be more worrying for bookmakers is the general sentiment expressed by Weir and McMillan that legislation for the sector hasn’t gone far enough to effectively combat problem gambling. One would expect a licensing system for operators to be all but guaranteed, but the SNP’s plans for an independent Scotland do not appear to stretch to that level of detail. And what of the National Lottery? As the most popular form of gambling in the country, will we see a Scottish equivalent? No one at the SNP has been able to provide answers to these questions over the past few weeks, suggesting that gambling legislation will not be a high priority for an independent Scotland – after all, the break-up of the Union will take precedence. And then of course there is the possibility that the Better Together campaign will prevail in tomorrow’s vote. If it does, the flirtation with independence will serve to boost bookmakers revenues in the third quarter. If it fails, it will heap more uncertainty on Britain's embattled bookmakers.